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Wednesday, May 30, 2012

More nickel-and-diming from the Sam Rands

The Portland City Council is jacking up small landlords' taxes. Which means that rents will go up for those landlords' tenants. More money for the bureaucrats to play with, and a few extra bucks for the big landlords as they raise rents, too. At City Hall, this is what's known as a win-win.

Comments (7)

If I read the article correctly, there is still an income-based exemption for businesses grossing less than $50,000 a year. So a small landlord grossing less than $4166/month in rent wouldn't pay an additional business "license fee" aka tax.

Back of the envelope math says you'd only need 2-3 detached homes or 4-5 apartment units to hit that mark, so quite a few currently exempt small landlords may soon be involuntarily donating to the City of Portland for more bike lanes and bioswales.

My understanding is the $50k/year limit includes all income, not just rental income. So unless the landlords are unemployed they will likely be paying the additional tax. (Well not really, they will pass it along to the renters with a small increase to cover filing expense and profit.)

Michael, if that's true, it would hit almost any "small landlord" who has a job and a paying tenant or two. Which would not disappoint the CoP, I'm sure.

If the landlord has other income, I think they could avoid having that income count toward the $50K cap by putting the rentals into one or more LLCs. I'm also a bit skeptical about the "pass it on" theory. If you hold out for a tenant willing to pay a higher rent, you risk a vacancy. It can take a lot of months of collecting a slightly higher rent to make up for what you lose with even 2 weeks of delay.

And this change (which will no doubt involve some new employees and more time and paper to handle and process) will generate a pathetic $200,000 (before expenses, I presume?). That doesn't even begin to cover any new salaries, the time involved and whatever rent assistance doled out to those who cannot afford to remain in their rental properties (if they qualify, that is). Maybe they can move into the loos! After all, I see people are moving into shipping containers in Portland (per the other item).

The same holds true for renters, they can't necessarily afford to move just because the rent is raised $20/month. Moving is expensive and a hassle, so they may have no choice. (I know my parents always passed on any taxes, fees, etc. that they incurred on their rental property, and only one time did a renter move out shortly after the increase, and that was after the sewer hook-up fees.)

Renters won't be affected much, if at all. Expenses for landlords go up all the time, but prices can only reflect the market, not what the landlord's costs are. Unfortunately, in the case of the small landlord, they will be hit hardest by these types of fees because their margins are so small - unless they have owned their property for many years and it has a low debt service or is free and clear. I can't figure out why PDX or any city would try to raise money in the backs of landlords who are providing true affordable housing. Existing housing units will be more affordable than something similar that is new, and anything new that claims to be affordable is reqlly just subsidized. Sounds like government is taking from some businesses to give to other businesses, though the path is not quite a straight line.

I can't figure out why PDX or any city would try to raise money in the backs of landlords who are providing true affordable housing.

Looks like one more avenue to get more money in for pet projects, maybe to assist with more funds for the Milwaukie Light Rail.
Might even be a movement afoot to get rid of true affordable housing, so that the public subsidized housing will become more dominant. More than one way to get landlords to raise their hands that they have had enough...and then what...sell their property...there may be others waiting in the wings to buy...and redo.

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